What standards apply to renting condos?

General Real Estate Investing
1

Hi all,
I have been looking at buying condos to rent out. They usuall list the HOA fees, but not any other insurance as an expense.

So several questions.

I have heard to budget about $50 per unit for maintenance, but if the HOA is taking care of the shell, how much do you figure for the interior maintenance?

Second, there is insurance in the HOA, so is there a need to carry additional insurance? IF so what kind of coverage and is there a rule of thumb that can be used just to estimate if the deal is close?

Thanks,

DB

2

Many condo association rules prohibit renters completely and/or place a limit on the percentage of units that can be rentals at any given time.

For interior maintenance (and reserves), I would still figure $30-40. You are normally responsible for the major mechanical systems (HVAC, plumbing, etc.) and if something big goes wrong in the development (roofs, replacing brick walls/fences, etc.) you can be hit with a "special assessment. It is good to have some reserves built up.

Keith

3

Thanks for the advice guys, these are condos in a group (6) that are being sold by an investor with renters in them, so I am assuming that renting them is within the rules. It is good to have an idea what things will run when you are looking at deals, because the sellers and their agents very rarely show the true expenses. (maintenance? what maintenance?)

Keith, on a seperate note, thanks for your 2000+posts. I read here alot and you are one of the reasons that I come here for education. Keep it up, many of us appreciate it a lot.

DB

4

Howdy DB:

The condo insurance covers wall to wall. What it does not cover in most units is :

Carpet and floor covering, appliances, cabinets, light fixtures, doors and trim, hardware, plumbing fixtures, paint on walls

Best to get a copy of the HOA policy to see exactly what is excluded. It can add up to a few grand and fast

5

Find out for sure, not everyone follows the rules. I’d hate to see you think it’s ok and find out the next month that all of your renters need to find a new place to live.

6

Find out for sure, not everyone follows the rules. I’d hate to see you think it’s ok and find out the next month that all of your renters need to find a new place to live.

Sorry if I left the impression that I was taking their word for it. I am very thorough with checking out the details if I get closer to a deal. I was just wanting a feel for some rough estimates and things to watch for when looking through listings. If I know about what I will have to budget, then I can sort out a lot of the weak possibilities.

Thanks, Ted, for your help too. That is what I had been hearing, exterior is HOA and interior is mine.

Learning and living,

DB

7

I’ve rented out a condo before. The HOA was 145/mo and in nearby associations was as high as 250/mo. This happens if you’re association doesn’t have enough reserves to pay for repainting or new roofs.

usually, they have enough insurance to cover damage to the exterior of the building, but you need to carry insurance for the interior damage. I paid about 15/mo for this. its usually the same cost as renters insurance.
there’s a lot less hassle to renting out condos than homes, however if you’re tenants are a nuisance, the neighbors might complain an awful lot.